Which of the following is a valid statement?
a. Required reserve ratio = required reserves as a percentage to total deposits.
b. Required reserves = the maximum reserves required by the Fed.
c. Excess reserves = total reserves plus required reserves.
d. All of these.
QUESTION 2An outward shift of an economy's production possibilities curve is caused by:
a. an increase in capital. b. an increase in labor.
c. an advance in technology. d. all of these.
QUESTION 3In the short run, wages are assumed to be:
a. constant.
b. sticky.
c. inflexible.
d. all of the above are true.
QUESTION 4Which of the following provides the best explanation of why low-income countries generally remain poor?
a. Their political environment and policies often discourage productive activity and reduce the potential gains from specialization and exchange.
b. They are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates.
c. They are poorly endowed with natural resources, which are essential for long-term rapid growth.
d. When the average income level is low, workers have little incentive to earn higher incomes.
QUESTION 5Which of the following is not an interest-earning asset of commercial banks?
a. Required reserves.
b. Checkable deposits.
c. Customer savings accounts.
d. All of the above are interest-earning assets of commercial banks.
e. None of the above are interest-earning assets of commercial banks.
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